Lido On Kusama

in Lido, Kusama by Kasper Rasmussen

Today we’re excited to unveil liquid staking on Kusama (KSM) on Moonriver.

 

Starting today, users can stake their KSM with Lido to earn daily Kusama staking rewards and benefit from the many opportunities available across the Kusama DeFi ecosystem.

 

To get started, visit ​​kusama.lido.fi.

 

For more information, visit the Lido for Kusama (KSM) documentation.

 

Liquid Staking on Kusama

Liquid staking on Kusama brings a number of new benefits to Kusama stakers.

 

Using Lido, KSM holders can now:

  • Stake their KSM to earn staking rewards every 24 hours.
  • Stake KSM without the delay of bonding/unbonding periods via third-party protocols.
  • Earn additional yield by leveraging the Kusama DeFi space (e.g. use staked KSM as collateral).
  • Maximise their staking rewards through dynamic reallocation to the most profitable KSM validator nodes.
  • Minimise their risk of KSM slashing events.

 

When staking KSM with Lido, users will receive a staked KSM (stKSM) in return, pegged 1:1 to KSM. stKSM is a rebasable token similar to stETH with rewards reflected through a daily balance increase. As such, when staking KSM with Lido, your stKSM wallet balance will grow on a daily basis as staking rewards are earned.

 

stKSM Launch Phases

 

1. Phase 1

 

For the first phase of stKSM (1-3 weeks from launch) there will be a stake cap of 10,000 KSM (approximately $1.6m), with reward oracles run by the MixBytes. During this phase we will see the launch of incentivised DeFi pools through which to deploy stKSM (e.g. as collateral for additional yield), as well as to sell/unstake stKSM without the delay on unbonding periods.

 

During this phase, the Lido DAO will select 20 validator nodes based on optimal performance over the previous 83 Kusama eras (approximately 21 days). During this phase, staked KSM will be dynamically allocated to validator nodes based on a number of node KPIs including top APR to stakers net validator’s fees, slashing events, stable fee rates and nominations enabled by the node.

 

2. Phase 2

 

After a successful phase 1, the maximum stake will be uncapped, as will the number of active validator nodes. In addition to this, we will see the launch of decentralised reward oracles and the development of a dynamic model to maximise APR for Lido KSM stakers. We are aiming for the start of Phase 2 to take place approximately 3 weeks from today’s launch.

 

As the amount of stake managed through Lido grows and approaches the point where it may affect overall staking allocation in Kusama, we commit to working with the community and validators to protect the decentralization of the network and overall chain health.

 

The Lido for Kusama launch plan has been developed by the MixBytes() team as part of their LEGO initiative to expand the Lido staking ecosystem with Kusama and Polkadot staking.

 

stKSM APR Formula

The staking APR is calculated dynamically and fluctuates based on the node APY and the individual node fee. The formula is as follows:

 

Staking APR * (1- node fee) * (1- Lido fee)

 

The Lido fee is set at 10% of net staker rewards. The node APY and the node fee changes from node to node. There will be 10-10.000 active validator nodes in the system and the node fee may differ between each of these.

 

Assuming an 20% staking APR, a 2% node reward fee and a 10% Lido fee, the final APR will be 17.64%.

 

20% * (1-2%) * (1-10%) = 17.64% APR

 

Fee Simulation

Comparing fees and rewards for regular staking versus Lido KSM staking, we ultimately see a higher net reward for users staking with Lido due to the dynamic reallocation towards the most profitable validator nodes.

 

See the calculation below for more information:

 

Simulation parameters:

With Lido staking:

  • Lido protocol fee is 10% of net staker rewards
  • A stake allocated per node is 1,000 KSM (200,000 USD).
  • Overall stake in the Lido protocol is 100,000 KSM (20,000,000 USD).
  • # of Validator nodes selected by Lido protocol is 100.

 

With regular staking:

  • A stake of 100,000 KSM (52,200 USD) equal to Lido simulation allocated to all validator nodes in the active set excluding nodes with 100% fee (766 nodes).

 

Simulation results:

100,000 KSM total stake:

  • Lido APR - 18.15%
  • Regular staking APR - 10.63%

 

10,000 KSM total stake (test cap):

  • Lido APR - 19.69%
  • Regular staking APR - 10.64%

 

Moving Forwards

We are incredibly excited about this launch and the further expansion of the Lido liquid staking ecosystem. MixBytes() have been an incredible partner and the work they have achieved in collaboration with LEGO has been phenomenal to witness. We look forward to taking this many steps further in the coming months, first with the launch of phase 2 KSM staking, as well as the upcoming launch of liquid staking on Polkadot.

 

We look forward to becoming a larger part of the Kusama ecosystem and working with Kusama, KSM validators and the surrounding community to ensure the continued growth and decentralisation of the Kusama network.

 

For more information, come visit us in the Lido Discord or Telegram, or reach out to MixBytes().

 

Happy KSM staking 🏝️